Retirement Pension

After having contributed during the working period for many years to the nations' wealth and prosperity, the pensioner should gain for the last period of life from a regular income to support his costs of living. A lifelong contribution to the SSO will entitle him to such an income, which level will depend on the number of years of contribution made and the level of income insured. The following section will provide more detailed information on retirement pension:

Retirement Age
Insured persons are entitled to receive pensions must have reached the age of 60. Persons having reached 60 years of age but still want continue to work must not exceed 65 years of age before receiving benefits. In this case, the pension will increase 0.5% per month according to the number of years worked beyond the age of 60 years. There are also some cases, that persons receive pensions already at the age of 55 years. But 0.5% will then be deducted from the monthly pension in proportion with to the outstanding years before reaching the age of 60.

Qualifying Period
The qualifying period refers to the total period of time when contributions have been paid to SSO. The period considered as qualifying period includes the period when pension points are given due to the fact that contributions are paid by the insured persons to SSO fund. However, there are some exceptions to the period of time that contributions have not been made to SSO fund, but SSO shall take into account such a qualifying period.

The period of time where contributions have not been made but included in the qualifying period includes:

  1. The period when benefits are received in case of sickness, maternity or temporary loss of working capacity;
  2. The period when benefits are received for the permanent loss of working capacity at the proportion of 60% and above;
  3. The period when caretaker benefits are received, only if the caretaker is an insured person.

Insured persons will receive a pension only if contributions have been paid to SSO for a minimum period of 5 years (60 months). If the full period of 5 years has not been accomplished, the retirement benefit will be paid to this retiree in form of a single lump sum.

Basis for the Assessment of Pensions
Pensions are assessed as follows:

Pension Points
Annually, an insured person will obtain pension points based upon the average contributions made by this person over a period of 12 months in the calendar year divided by the average contributions made by all insured persons within the same period of time. In case of resulting decimal figure, the pension points will include the 3rd decimal figure.

In case an insured person has omitted to pay contributions due to sickness or other reasons, pension points applicable to such person will be equal to the period prior to such omission.

Example:
The employee earns 1,000,000 Kip each month. Hence, his average contributions of the year is 1,000,000 Kip *4.5% = 45,000 Kip. Under the conditions that the average income of all insured persons in this year is at 900,000 Kip per month. So, their average contributions of the year is 900,000 Kip * 4.5% = 40,500 Kip, his pension points are determined as follows:

45,000 Kip / 40,500 Kip = 1.111 Points.


Special Pension Points

From June 2001 to May 2002, at the first year of beginning of SSO, insured persons of 31 years of age or older have been given special pension points. If less than 45 years, pension points have been assessed by deducting the concerned person's age when he/she subscribed with SSO from an index of 30, and then the result will be multiplied by annual free pension point which is equal to 0.8 point. While persons above 45 years of age have received pension points of 15 years (12 points). Special pension points within a year are equal to 0.8. For employees who joined SSO later, the number of years between May 2002 and the year of entry are deducted from the number of special pension points.

Average Wages
The average wages result from averaging all insured persons total earnings in the calendar year prior to the disbursement of pensions and shall be recalculated on a yearly basis.

Calculation of Pension
The total pensions are paid from pension points received or acquired by insured persons multiplied by the average wages, which result is then multiplied by 1.5% (index).

Distribution of Benefit after a Divorce
In case an insured person divorces prior to receiving his/her pension, the right to such pension and pension points will be equally divided between spouses provided such spouses are married within the provisions of the Family Law.

Lump Sum payment

Conditions
For insured persons who have not acquired the qualifying conditions, SSO will compensate for the contributions paid in form of a Lump Sum payment. Only insured persons who have reached the age of 55, and paid contributions for at least 1 year but less than 5 years, are entitled to Lump Sum payment from SSO. Within 3 months after receiving Lump Sum payment, the insured persons and family members still have the right to access Medical Care Benefit un der SSO regulations. Thereafter, the membership to SSO will automatically end.

Calculation of Lump Sum payment
Having paid contributions for 1 year, the insured person will receive a Lump Sum payment equivalent to 70% of the average of his/her insured salary with the last 12 months. For contributions of more than one year, the Lump sum will be determined by multiplying the number of years with the amount calculated for a one year payment.